CERES No. 068 (Vol. 12, No. 2) March-April 1979. The Case for National Planning for Disasters (Food and Agriculture Organization of the United Nations)

(introduction...)

Acknowledgements

Cerescope

Facts and figures

The old barrier is disappearing...

The counter-reform bloc

Incentives and mechanisms

How real was Algeria's agrarian revolution?

''The third world does not have to wait for the North

Technology that won't take root

Reaction

Books

The counter-reform bloc

Foreign control over farmland is on the rise, often abetted by
local monopolists

by Ernest Feder

To examine how transnational agribusiness compromises land
reform-a wording borrowed from the 1976 Sixth Report on Progress in Land Reform
-the simplest would be to look up the record. An ideal case would read as
follows.

"Colonel, see here. Parliament is discussing 'Amendments to the
1898 law on farm tenancy' and it has something there on expropriation -
unutilized lands in farms over 4 500 ha, with compensation at current market
values, as fixed by the owners, and (I really can't believe it) distributing
that to peasants with a down payment of $250/ha. My company does not like that!
Either you withdraw this bill..."

"But your Excellency, we only thought ..."

"Emilio, no more discussion, please. Either you withdraw this
here bill by 9 or 1 telex my government to collect your 3.3 thousand million
debt already overdue and I pick up my subsidiary and put it in Pooribia, right
to the south of you." (Exit (ex) Admiral Schwefel.)

There is a simple reason why this approach would not get us very
far. There may in fact be a number of instances where such firms interfere with
local politics and use "big guns," metaphorically speaking, to sabotage land
reform legislation and institutes.

And we are bound to accept that all such firms, no matter from
what capitalist country they hail, simply do not like and are afraid of land
reforms. But overt acts? Leaked to the press?

I know of only one case reported in The Guardian (3 December
1974) where the World Bank, staunch supporter and partner of transnational
agribusiness corporations, put pressure on the Tanzanian Government, so it was
alleged, to modify its ujamaa village programme to make it consistent with
private entrepreneurship, if Tanzania wanted to obtain "development" loans; and
the Bank promptly put out a denial. Agribusiness does not need to speak out or
act overtly against land reforms. It "compromises" reforms in the Third World
through an unsophisticated process- the ultra-rapid expansion of transnational
monopoly capital - which goes on silently, day-in day-out, year after year. Its
counter-reform action is inherent in the way transnational agribusiness firms
operate.

How do the leaders of the capitalist system look at the
redistribution of wealth, income and power, which is the fundamental purpose of
reform? What are the economic and noneconomic resources and techniques employed
to impede such a redistribution?

Reduces the risks to zero

The capitalist system is not always against "land reform"
because it defines it in different ways. It tolerates, it even sponsors pilot
project-type expropriations of medium sized landholdings cum redistribution to a
handful of peasants. Or some sort of collectives, called optimistically "new
forms of land tenure," which are really peasant groupings obtaining group
credits because this reduces the banks' risks to almost zero. Or minor
colonization schemes that harm no one when they involve virgin lands in which no
sensible capitalist has as yet an economic or political interest. Thus we are
confronted with the following real issue: what are the limits of wealth and
income distribution schemes that the system will tolerate in developing
countries?

The case has been put forward admirably by the World Bank, one
of the pillars of the capitalist system, capital's principal banker and the
system's foremost spokesman. The Bank also publishes important documents about
land reform and the rural poor. Their general views have been outlined in the
academic Redistribution with Growth, a collection of political essays edited by
one of the Bank's directors. The authors have hailed their book as a
"breakthrough" in development strategy, and so it must throw light on the
question we are trying to answer.

However, the book is a breakthrough into absurdity. Its basic
idea is simple enough. A modest redistribution of income to the poor does no
harm to growth. Everyone knows that there can be no income redistribution
without a redistribution of wealth. But this does not discourage the authors.
They simply do not like redistribution of wealth-a socialist measure-so they
speak about redistributing an increment in national wealth. But how? I should
like to see it done, for example, in the case of a new factory, owned 49 percent
by a transnational agribusiness corporation. The authors have no recipe. One
solution would be for the poor to receive a small portion of the installation in
shares or bonds-but no more than 2 percent which is the limit. If it were more,
so the authors claim, the rich would not like it. A little thought quickly
reveals that this scheme would favour the rich. The poor urgently need food,
clothing, housing, medical care. They would have to sell their bonds or shares
immediately at emergency discount prices through their brokers! Good for the
brokers. The poor would gain a bit once and then relapse into poverty, and the
rich would permanently stay richer. All I have done here is to follow the
authors' logic a little more daringly.

So we turn to income distribution- one does not know how, since
the wealth distribution scheme is inoperative. Again, the maximum must be 2
percent of the increment in national income. The proposition is evidently tied
to "prosperity" when national income rises. There will be nothing to distribute
if it stagnates or declines- precisely when the poor suffer most- unless the
poor now re-redistribute 2 percent of the decline in income to the rich to
compensate them for previous sacrifices. And if income increases really at a
normal rate (say, 3 percent), the partitioning of 2 percent of this increment
among millions of poor results in atomized benefits totally invisible to the
latter.

Not an academic toy

Our answer is therefore that the system's margin of tolerance is
obviously extremely narrow. In theory, the margin is "up to 2 percent," putting
it plastically; in practice, it is near zero, because the theory is absurd.
Redistribution with Growth turns out to be a hoax.

The new breakthrough strategy is not merely an academic toy. Its
importance is enormous because it is at the base of McNamara's grandiose plan to
" assist " 700 million rural poor with World Bank credit (Nairobi, 1973).
Promptly, land reform plays an ephemeral role in the plan, as expected. In his
29-page speech, McNamara devoted 10 lines, plus a few ornamental comments, to
this delicate subject as "involving reasonable land ceilings, just compensation,
sensible tenancy security and adequate incentives for land consolidation" (not:
giving land to the peasants on a large scale), and one need not be an expert to
recognize that the speaker did not think of land reform when he mentioned the
concept. In this respect, the World Bank is entirely consistent and simply does
not "assist" land reforms anywhere, notwithstanding all the books it publishes
about the subject. The key technique to redistributing income in developing
countries now lies with agricultural credit. The thought is striking. More
credit can be useful to enhance the status of the peasants. But when we consider
the conditions prevailing in developing agricultures where every trick is used
to deprive the peasants of their earnings and still more of any increased
earnings; the impossibility of providing peasants permanently with a flow of
credit funds, given the limited resources that the capitalist banking system,
including the World Bank, is willing to devote to the scheme; and the insistence
of the World Bank of wishing to work their scheme through existing institutions,
all notoriously bent on giving the highest priority to their rich customers, the
simplistic, if not hypocritical, character of the plan becomes apparent. What is
more: there is now conclusive evidence that credit schemes, such as the World
Bank's, are considerably more harmful than beneficial to the peasants.

The tip of the iceberg

Let us take it for granted that agribusiness really compromises
land reform. How does it marshal! the power? The answer lies in the combination
of financial resources, institutional and organizational integration,
omnipresence at ail levels and political backing at home and abroad.

It is well known that few firms transact most food sales
worldwide. Some one hundred concerns, each with annual sales over $1 thousand
million in 1974, would now have a conservatively estimated total sales volume of
some $300 thousand million. This statistic reflects the tip of the iceberg. I
must insist again that, to appreciate the full power of agribusiness, one cannot
see it as the summation of food firms. Rather it is a conglomerate of two groups
of giant firms and agencies operating worldwide:

A. Transnational agribusiness firms engaged in production or
distribution (or both) of agricultural food and non-food products; those engaged
in the production (or local assembly) and distribution of agricultural inputs;
and those engaged in supplying services.

No one has ever estimated the aggregate sales of products and
services related to agriculture of all these firms, but the sum total must be
truly fantastic, even though firms may be engaged simultaneously in two or all
activities mentioned.

B. Private and public, national, bilateral or international
agencies which sponsor or give financial and other support to overseas ventures
of firms in "A", directly or indirectly. This includes private (super) agencies
for investment planning and fund-raising; private banks; bilateral and
international financial and technical assistance agencies; and many others.

The combined resources of these numerous agencies are also
enormous. Their main function is to organize or improve the economic and
institutional infra- and superstructure in the Third World to facilitate old and
new overseas ventures of the firms in group "A." Their resources add to the
weight that the firms in "A" can throw around in the Third World. What few
realize is that "A" and "B" work together almost conspiratorially, so that the
full weight of international monopoly capital and of the institutional structure
which supports it is behind worldwide counter-reform.

To illustrate. When, in the 1960s, the demand for meat boomed in
the industrial countries, private capital streamed into Latin America and Africa
to expand cheap meat production rapidly. To support private investments, the
World Bank and the Inter-American Development Bank (IDB) alone invested in
1971-77 an estimated $1 thousand million in livestock development projects in
Latin America; the recipients contributed another $1 thousand million-a total of
over $2 thousand million of public funds, all for the benefit of the rich
countries. Latin America and Africa did not benefit: officially, the Banks'
projects should improve the local diet, but meat consumption declines.

Destroys local research

Another example more illustrative of the coordination among
private capital and public agencies. The previously mentioned livestock
investments are activated mainly in tropical regions. Since 1965, the US boosted
its research on tropical beef cattle pro-auction in the US significantly. In
1971, the establishment of the Consultative Group on International Agricultural
Research (CGIAR), with financial backing from major industrial countries and
private foundations, and with the cooperation of international agencies,
provided for centralized financing and control of 11 major International
Research Centres, of which three are for livestock. The way this network
operates practically guarantees that Centre-research must be of exclusive
benefit to transnational agribusiness corporations. The Centres monopolize,
together with US research stations, practically all modern research knowledge
and data. Under the circumstances, Third World countries are unable to carry out
independent research on problems they might consider to have greater priority.
As a matter of fact, CGIAR destroys local research in agriculture.

The real control by agribusiness, i.e. both private firms of
group "A" and agencies in group "B." stems from the recent huge transfers of
capital and technology. (Capital means here fixed and operating capital
expenditures.) Here we encounter a real difficulty. It is nearly impossible to
estimate, much less calculate, the aggregate volume of these transfers that are
made at all levels in agriculture and in agriculture-related industries and
services for two major reasons: absence of statistics (e.g., on investments in
farmland or the volume of foreign operating funds), and the many devious ways by
which they are manipulated (e.g., the use of strawmen to hide real
-foreign-ownership). We obtain a rough idea when we examine the development
assistance of the international agencies because they are the barometers of the
flux of international monopoly capital. Development assistance, both financial
and technical, is now explicitly consecrated to enhancing the business volume of
agribusiness firms (group "A"), and it is logical that the resources of the
agencies flow in the same direction as private monopoly capital.

For example, in Latin America, in only seven years, the World
Bank and IDB "invested" nearly $3.8 thousand million for the benefit of
agribusiness, but this figure has to be doubled to include national counterpart
funds, many other agencies also spent funds there, the figure should be raised,
perhaps doubled. I estimate that approximately $15 thousand million of public,
including counterpart, moneys flowed into Latin American agriculture alone. If
we assume that these funds represent about one half of all private and public
investments going into agriculture (which is a very cautious approach), we
arrive at a total of some $30 thousand million for only 1971-77-not including
operating capital or technology transfers except those financed out of resources
provided by the development agencies. (The Asian Development Bank spent nearly
$1 thousand million for Asian agriculture during the same period which, together
with the World Bank loans, represents a total of about $4.2 thousand million for
the two agencies alone.)

True, the public funds tend to be concentrated, like private
investments, in a few "privileged" countries. But foreign public and private
moneys for local agriculture are always significant when compared to local
private investments and public resources, and because they are made in the
crucial and most profitable agricultural sectors, on the best available soils.

One conclusion from everything we have said so far jumps to the
eye. To accuse agribusiness of compromising land reforms in poor countries is
much too narrow a view. What compromises them is the ultra-rapid expansion of
capitalism into all nooks and corners of developing agricultures, a process that
destroys the remnants of the peasant sectors and even the traditional latifundio
sectors as the latter become the appendix of international agribusiness monopoly
capital. Let us comment briefly on the processes that lead to the destruction of
the peasantry and its implications for reform.

The matter should be examined at three levels: local politics;
agriculture and related industries and services; and demography.

Sabotaging aid

The presence of agribusiness reduces the margin within which
developing governments can plan and execute social programmes (reforms,
employment, food distribution, adequate minimum wages, etc., all of which would
benefit the proletariat) to practically zero. Many governments are not inclined
but may feel obliged to undertake such programmes to forestall popular
discontent, whose potential increases obligatorily with capitalist expansion.
The presence of agribusiness makes such action highly unlikely: either firms or
agencies threaten to withdraw their ventures and "development assistance" or
they sabotage new investments and "aid." Or the status of agribusiness is
enhanced through arms sales, which takes care of popular discontent. At the same
time? foreign enterprises build up a strong local clientele, including the
bureaucracy, which supports the overseas ventures of agribusiness in return for
the monetary rewards it receives from cooperating with them. Thus, international
monopoly capital simply destroys any bargaining power that local governments
might have had in favour of socially oriented programmes, including land
reforms.

Equally important, if not more so, is the boost that
agribusiness gives the local rural power structure. This occurs in three ways.
First, there are the modernizing land monopolists- those who take advantage of
the foreign private and public capital and technology transfers and become fully
integrated (vertically) in the agribusiness system. They are bound to see in
agribusiness the best economic and political ally they ever had-considerably
better than local government because of its financial might. The "traditional"
land monopolists benefit from the greater security of their tenure, as land
reforms now have become a remote possibility, and from rising land and products
prices. And there is agribusiness itself, a large, even huge landowner and
tenant. This makes its political and economic interests and ambitions coincide
with those of the other two groups. Even if the economic interests do not always
coincide completely, their political interests must be the same: to maintain
land monopolization and keep the peasants off the land.

Foreign control over farmland - the countries' best areas in
terms of soil, water, climate and location - through ownership, rentals, the
production contract system or purchase of crops in advance of harvest and
including the control exercised by development agencies through their loan and
technical assistance projects, is now so widespread that a significant
proportion of the agricultural activities in the developing countries is managed
directly by agribusiness, and this control is increasing rapidly. This process
is accompanied by a dramatic increase in ownership concentration-the inevitable
outcome of capitalist expansion. Here the modernization of the cattle sector,
which the World Bank, IDB and other agencies have helped finance generously in
recent years, as we mentioned earlier, plays a highly significant role,
particularly in Latin America, because the livestock sector has been and
continues to be the basis of the worldwide latifundio sector in many countries.
Simultaneously, at the industrial and service level, a similar concentration
takes place as agribusiness displaces local firms. The two concentration
processes reinforce each other mutually. In sum total, the local and
international counter-reform block is so potent that I do not see how it can be
broken in the foreseeable future.

Tend to disappear

This, from the peasants' point of view, hopeless condition is
further reinforced by-coincidental or intentional-demographic changes, which the
activities of agribusiness bring about in the Third World. In the shorter run,
the modernization of developing agricultures that the enormous capital and
technology transfers seek to bring about and which consists in replacing
manpower by capital, in combination with the rapid process of land
concentration, eliminates both smallholders and rural wage labour in a
relentless process. Not only are jobs lost by modernization in the aggregate -
contrary to what the ´'green revolutionaries" maintain - but
labour-intensive crop systems also tend to disappear by and by. In Mexico, for
example, which is a model of capitalist growth under conditions of
underdevelopment, the peasants' numbers were reduced by nearly 50 percent and
wage labour by nearly 10 percent in only 10 years ( 1960-70). How otherwise
could one account for the mushroom growth of small and large cities? The
capitalist system simply cannot resolve this problem and does not seriously wish
to resolve it- a reason why the schemes to "assist the rural poor" now strongly
supported by the World Bank and other agencies cannot be taken seriously.

In the longer run, we are facing the depopulation of the
countryside in the developing countries - as unreal as this may appear to be,
given the present-day situation still. In a depopulated countryside, what would
be the need for land reform? The problem simply would have taken care of itself.
This probably does not escape
agribusiness.